The long-term goal of this study is to understand the biological function of protein modification by the ubiquitin like protein ISG15. In recent years our knowledge of protein ubiquitination has expanded rapidly and as a consequence protein ubiquitination has been found to play important roles in various aspects of cellular functions, including cell cycle, membrane receptor signal transduction, endocytosis, and DNA repair. In contrast, little is known about the role of protein modification by ISG15. We cloned a novel member of the deubiquitinating enzyme family, termed UBP43. Further studies have demonstrated that UBP43 is a protease that specifically removes ISG15 from its conjugates. Type I interferon (INFa/b) and LPS strongly upregulate both UBP43 expression and protein ISGylation. We have generated UBP43 knockout mice. UBP43 deficient mice show fundamental defects in development and in response to interferon and LPS treatment. This proposal will test the hypothesis that protein ISG15 modification plays a fundamental role in maintaining cellular metabolism under conditions of stress. The studies proposed in Specific Aim#1 will identify the molecular targets of ISG15. We have established an immuno-affinity purification method for such an approach. The studies proposed in Specific Aim #2 will characterize the function of protein ISGylation by defining ISG15 modification sites in target proteins and studying the effect of ISGylation on target proteins. We have identified several ISGylated proteins. The studies proposed in Specific Aim #3 will generate conditional ISG15 activating enzyme UBE1L knockout mice to analyze the function of protein ISGylation. The experiments proposed will address important questions about protein ISGylation and may provide valuable insights into the therapeutic treatment of human diseases, such as viral infection and cancer.